Norfolk, Virginia - Economy

Economy

Since Norfolk serves as the commercial and cultural center for the unusual geographical region of Hampton Roads (and in its political structure of independent cities), it can be difficult to separate the economic characteristics of Norfolk from that of the region as a whole.

The waterways which almost completely surround the Hampton Roads region play an important part in the local economy. As a strategic location at the mouth of the Chesapeake Bay, its protected deep-water channels serve as a major trade artery for the import and export of goods from across the Mid-Atlantic, Mid-West, and internationally.

In addition to commercial activities, Hampton Roads is a major military center, particularly for the United States Navy, and Norfolk serves as the home for the most important of these regional installations, Naval Station Norfolk, the world's largest naval station. Located on Sewell's Point Peninsula, in the northwest corner of the city, the installation is the current headquarters of the United States Fleet Forces Command (formerly known as the Atlantic Fleet), as well as being home port for the Second Fleet, which compromises approximately 62,000 active duty personnel, 75 ships, and 132 aircraft. The base also serves as the headquarters to the Allied Command Transformation (NATO) and the United States Joint Forces Command.

The region also plays an important role in defense contracting, with particular emphasis in the shipbuilding and ship repair businesses for the city of Norfolk. Major private shipyards located in Norfolk or the Hampton Roads area include: Huntington Ingalls Industries (formerly Northrop Grumman Newport News) in Newport News, BAE Systems Norfolk Ship Repair, General Dynamics NASSCO Norfolk, and Colonna's Shipyard Inc., while the US Navy's Norfolk Naval Shipyard is just across the Downtown Tunnel in Portsmouth. Most contracts fulfilled by these shipyards are issued by the Navy, though some private commercial repair also takes place. Over 35% of Gross Regional Product (which includes the entire Norfolk-Newport News-Virginia Beach MSA), is attributable to defense spending, and that 75% of all regional growth since 2001 is attributable to increases in defense spending.

After the military, the second largest and most important industry for Hampton Roads and Norfolk based on economic impact are the region's cargo ports. Headquartered in Norfolk, the Virginia Port Authority (VPA) is a Commonwealth of Virginia owned-entity that, in turn, owns and operates three major port facilities in Hampton Roads for break-bulk and container type cargo. In Norfolk, Norfolk International Terminals (NIT) represents one of those three facilities and is home to the world's largest and fastest container cranes. Together, the three terminals of the VPA handled a total of over 2 million TEUs and 475,000 tons of breakbulk cargo in 2006, making it the second busiest port on the east coast of North America by total cargo volume after the Port of New York and New Jersey.

In addition to NIT, Norfolk is home to Lambert's Point Docks, the largest coal trans-shipment point in the Northern Hemisphere, with annual throughput of approximately 48 million tons. Bituminous coal is primarily sourced from the Appalachian mountains in western Virginia, West Virginia, and Kentucky. The coal is loaded onto trains and sent to the port where it is unloaded onto large breakbulk cargo ships and destined for New England, Europe, and Asia.

Between 1925 and 2007, Ford Motor Company operated Norfolk Assembly, a manufacturing plant located on the Elizabeth River that had produced the Model T, sedans and station wagons before building F-150 pick-up trucks. Before it closed, the plant employed more than 2,600 people at the 2,800,000-square-foot (260,000 m2) facility.

Most major shipping lines have a permanent presence in the region with some combination of sales, distribution, and/or logistical offices, many of which are located in Norfolk. In addition, many of the largest international shipping companies have chosen Norfolk as their North American headquarters. These companies are either located at the Norfolk World Trade Center building or have constructed buildings in the Lake Wright Executive Center office park. The French firm CMA CGM, the Israeli firm Zim Integrated Shipping Services, and Maersk Line Limited, a subsidiary of the world's largest shipping line, A. P. Moller-Maersk Group, have their North American headquarters in Norfolk. Major companies headquartered in Norfolk include Norfolk Southern, Landmark Communications, Dominion Enterprises, FHC Health Systems (parent company of ValueOptions), Portfolio Recovery Associates, and BlackHawk Products Group.

Though Virginia Beach and Williamsburg have traditionally been the centers of tourism for the region, the rebirth of downtown Norfolk and the construction of a cruise ship pier at the foot of Nauticus in downtown has driven tourism to become an increasingly important part of the city's economy. The number of cruise ship passengers who visited Norfolk increased from 50,000 in 2003, to 107,000 in 2004 and 2005. Also in April 2007, the city completed construction on a $36 million state-of-the-art cruise ship terminal alongside the pier. Partly due to this construction, passenger counts dropped to 70,000 in 2006, but is expected to rebound to 90,000 in 2007, and higher in later years. Unlike most cruise ship terminals which are located in industrial areas, the downtown location of Norfolk's terminal has received favorable reviews from both tourists and the cruise lines who enjoy its proximity to the city's hotels, restaurants, shopping, and cultural amenities.

Hampton Roads is home to four Fortune 500 companies. Representing the food industry, transportation, retail and healthcare, these four companies are located in Smithfield, Norfolk, Chesapeake and Virginia Beach.

• 216 Smithfield Foods
• 261 Norfolk Southern
• 390 Dollar Tree
• 396 Amerigroup